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Allegis Capital CERTIFIED

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FIRM OVERVIEW: Medium Private VC founded in 1995 based out of Palo Alto, USA (US West)

FIRM DESCRIPTION: We are a seed and early-stage venture fund with $500 million under management. We invest in the “Digital Economy” specifically enabling technologies for Digital Commerce, Digital Content, Digital Communities, Digital Communications, and the Digital Enterprise. We have a number of large, multi-national corporations as LPs that we leverage to the advantage of our portfolio companies. We are also fortunate to have more than 65% of our portfolio companies run by entrepreneurs who have worked with us more than once. We target ownership in our companies at 25-30% and invest to optimize returns to our portfolio companies and limited partners in an M&A environment.

We had a really bad experience with Allegis (Spencer) this summer. He heard about our deal, reached out to us, and got all hot and heavy and took a lot of our time with diligence. Claimed it was all going very well, and specifically indicated that they intended to come forward with a term sheet "within the next few days". I talked to Spencer 4 or 5 days later, and it was like he had almost never heard of me or my company. Total twilight zone. Made comments about confusion in his PDA about our deal timing, but after spending 3 weeks in diligence with him, he truly acted like it was a cold introduction call. Never heard from him again.

Obviously this means he got some sort of negative diligence feedback, but this was about the most classless way to communicate a change of direction that I have ever seen.

I pitched these guys quite a while ago. I owned quite a bit of stock in the company. They had the nerve to say I owned way too much and that in order to do a deal they wanted most of the company and they would give me a management fee. I was told to come back after I was more realistic regarding ownership.

Posted by
Anonymous
on 2007-12-31

PUBLIC:

Lara is surprising refreshing and honest -- both about the market -- and your chances of receiving funding (and from who) if not her. She know here markets -- and after speaking with a few CEO's of boards she's on -- the feedback from all is she add's more value than any other VC's on their board.

Posted by
neillk
on 2007-09-15

PUBLIC:

Lara Druyan understands the issues with online shopping (especially for women). It is best summed up in a Gartner, Inc. report from May 2007, "Making a purchase on the Web is an act done primarily in solitude, rather than in the presence of others. The dimension of 'social shopping' has yet to be fully exploited and offers great potential for growth and disruptive change." My company is a bit too early for a venture round but Lara offered her assistance in a variety of useful ways. It was a pleasure to meet with a VC that had great domain expertise, offered specific advice, and genuinely wanted to help make my life easier, with no strings attached.

Posted by
laserbeam
on 2007-08-17

Posted by
blues2man
on 2008-03-12

PUBLIC:

As a long-time senior executive of major semiconductor corporations and recently responsible for raising over 200M in three start-ups, I have learned the difference between OK, Good, and Great VC partnerships. Allegis is truly one of the great ones, beginning with their LP's; mostly major corporations that through Allegis' intro's can become preferred customers. From the first day of funding with Allegis (and specifically, board member Bob Ackerman), the total partnership was involved in the success of our company. I could call on Bob at anytime, any place in the world, and his response was immediate and relevant. Bob, with unquestionable integrity, left management to run the business and RUN is the key word there. He didn't ask for useless information that tied up my management's time to satisfy partnership egos or redundant questions most other less knowledgeable VC firms would have about the semiconductor business.
Allegis is tough, demanding but most importantly, fair in the way they treat people and corporate valuations. If you are going to present to Allegis, you better have your sh** together! Due to their size, experience and knowledge of markets, they can quickly make high-risk decisions that stick. If they say the money 's in the bank...believe it.

Posted by
anonymous
on 2007-07-22

PUBLIC:

I have pitched to Allegis in several past startups and have known many of the partners for about 5 years now. We just closed a seed round of funding with them in our Preferred A.

Negotiations on terms were fine - we were very realistic going into the deal, so there were no problems in the negotiations. Allegis is very practical in their approach to funding terms, and very fair and up front.

Allegis is ethical in their approach to your competitive data. They have never sent me any competitive data from companies that have pitched to them. In my past companies, they have always been up front in telling me when they already had an investment in this space. I believe they would never let you come pitch to them, just to give your slides to one of their companies.

Lara Druyan listened to our presentation and liked what we were working on. She liked the market, and our competitive approach, but we were way too early for venture capital funding at the time. We did not have enough traction, and she could see some areas that we could really use some help in course correction and advice. She was blunt and open enough to give us direct feedback. (Never argue when you are getting feedback like this. Just listen with an open mind. Open feedback is a valuable commodity that you rarely see from VC's. Oh - and by the way - reaction to this feedback is a test - openness to new ideas is critical in their evaluation of entrepreneurs.)

Lara opened up her impressive Rolodex of connections and knew the right people to introduce us to - experts that could help us develop our business plan and product. These contacts respect Lara and were very responsive to her introductions. She was willing to help us and put time into advising us, when she and Allegis were not yet ready to invest. She proactively called us back and set up follow up appointments to get an update on our progress and then suggest areas we should continue to develop. When she sees the potential, she is willing to cultivate the business to turn it into something valuable that Allegis will want to invest in. This made her an invaluable partner long before we fit the profile of an Allegis investment. This kind of support is so rare, and you will never see it from the "top-drawer" big VC firms. Big VC's don't believe they need to get involved early to cultivate value in your company, or prove their own value to you.

Jean-Louis Gassee met with us on several occasions to review our plan. He is bullsh-t proof. By that I mean he can see crap coming from a mile away. If your plan is not well thought out he will catch you on it, and he will tell you, and rather bluntly. He will not waste your time or his. There is a great quote from Jean-Louis that I always like to remember. He told me: "when it comes to VC's, no response is a NO response." Lack of feedback, or lack of questions or follow up is a very loud answer of no.

Be prepared - Jean-Louis will test you. One time we had an appointment with him, and set up our PC to do our standard pitch. He came in the room and told us to shut off the projector, shut our PC, and to then briefly explain to him what we do. We were a consumer-oriented company and he knew that coming in. He told us to explain it as though we were talking to his wife. No slides, no elaborate pitch - just tell him the value. This is harder than you might think, and was an incredible test of how much we really understood the value of what we were delivering to the end user.

At another meeting, we pitched an Internet advertising business plan, and Jean-Louis said - "So you're ad pimps - that's your plan"" At first we did not know how to answer such an open ended comment. Did that mean he did not like the business" We realized after the meeting, that he was testing what we knew about the Internet advertising business and the competition. If we could defend our business plan as "ad pimps" he was fine with that.

Pete Bodine is on our board. He provides a lot of value, particularly in his understanding of the market. The afternoon after we pitched to the partners - Spencer Tall went over to one of his companies to go set up a partnership for us. They had not even finished deciding on how much or when they wanted to invest and Spencer was helping us with a new biz dev deal.

Posted by
mrgeek
on 2007-08-02

PUBLIC:

I am on my second deal with Allegis. On the first deal they really assisted in securing the B round. The market did not materialize as we expected, so in the end it did not go so well. We are working together again on a new deal, which pretty much says it all. Jean-Louis is an excellent board member and has great experience to share. Per some of the comments here, he does not put up with any bullshit, so I recommend avoiding any tap dancing or long winded answers with no point. Lara Druyan is really sharp as well.

Posted by
dougklein
on 2007-06-28

PUBLIC:

Allegis invested in my last company and proved to be a very supportive investor. Lara Druyan was the partner on our board and she always went out of her way (and continues to do so with the company) to help. Of all the board members at the company she was the only one who consistently reached out to all of the executive team to offer assistance.

Allegis is also generous with their rolodex for introductions to their LPs, which can be very useful if you happen to be building enterprise focused products. Depending on your needs this can be quite useful. (I happen to believe that identifying the value beyond just money is an important element of evaluating investors, and is one that a lot of first time entrepreneurs neglect.)

Posted by
pmabray
on 2007-06-27

PUBLIC:

I found Allegis to be the best firm I ever worked with. Not only did they coach me through a pitch process with their company, but they gave incredibly fair terms. Moreover, they are an excellent VC and Bob Ackerman in particular is a key asset as a Board member. They work side by side with our company even past hours you would expect from any firm (we often communicate as late as 1 am with them). They have made key introductions as well as helped us engage in all relations that help our company accelerate. Finally, they are former "operators" and with that knowledge, help and constructively guide our team and company so that we have better success through our efforts. Once you have them on your side, they pull out all stops to help you and the company succeed.

Posted by
jaddunning
on 2007-06-27

PUBLIC:

I have worked with Allegis Capital in two successful start-ups. I have found the firm, and particularly Bob Ackerman, very effective as advisors and collaborators. The firm's network is good, and they make quick, decisive funding decisions. They are also very management-friendly. Most of the partners have deep operating experience, which also sets them apart.

Posted by
Kendall
on 2007-06-28

PUBLIC:

Allegis was the lead investor in my series B and they did a great job of helping us find several other top VCs to join the round. I like all of their partners, but I know Bob Ackman the best since he took the lead on the deal. Bob Ackerman set a fair valuation and fair terms. Due diligence was straight forward and quick. As a board member Bob was very active and he has a great network. He set up many meetings for us with strategic partners. Most importantly during our acquisition discussions Bob provided some very important feedback that helped us complete a very good exit to a fortune 500 company.